Hay Group: 5 key challenges facing UK businesses

21 April 2015 Consultancy.uk 4 min. read
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As UK businesses are trying to maintain high performance in the changing business environment, they are faced with five key challenges, research by Hay Group shows. According to the firm, an engaged and enabled workforce is needed to counter the issues of productivity, innovation, collaboration, transparency and business agility. As such, businesses should view their employees and their engagement as critical to the future of their business.

Global management consulting firm Hay Group recently released a new report, titled ‘Engaging hearts & minds: preparing for a changing world’, in which it highlights the challenges businesses face in the changing world. The business environment as we know it is being transformed by six megatrends* that change how people work, what they care about, and how to motivate them to perform.

Hay Group’s UK research, which comprised responses from 500,000 UK employees from 100 organisations, shows that UK businesses are faced with five key challenges over the next fifteen years, as a result of the megatrends, that need to be addressed to maintain a high-performance now and in the future.

According to the firm, this will depend on an engaged and enabled workforce, yet engagement and enablement levels in many UK businesses have not improved since 2008. “The business environment is rapidly changing.  Our research shows that many companies don’t currently have the right strategies in place to respond to the challenges this brings through arguably their most critical asset - their people,” explains Martin Palimeris, Senior Consultant at Hay Group.


To keep up with the changing business environment, collaboration will be required: bringing together teams, functions, organisations and even competitors to reach solutions. Hay Group’s research shows that although 80% of UK organisations place ‘team-working’ amongst their strengths, 52% of employees says their teams are not adequately supported by other departments. In addition, 42% says that cooperation and sharing of ideas and resources is not encouraged in their company. “Organisations need to make sure they have the right platforms and processes in place to support collaboration and that this is encouraged at a senior level. Fail to do so, and they risk leaving employees feeling frustrated and disengaged,” says Palimeris.

The second challenge facing UK businesses is innovation. 46% of respondents say their organisation is not innovating the way work is done and 41% say they do not feel encouraged to try new ideas and ways of working themselves. Palimeris explains: “Many organisations are great at creating new products for their customers but fail to replicate this innovation internally. Companies need to think about how they encourage and incentivise innovation. This may depend on them putting processes in place for employees to learn from colleagues across the business, or linking reward and recognition to innovation alongside performance.”


Productivity is also seen as a key challenge, with half (54%) of employees saying that staffing levels are inadequate in their business area. According to Hay Group, productivity improvement depends on innovation, however, “there is a fine balance for companies to strike between this and keeping people focused on their day-to-day business operations.” The training of staff, introduction of digital technologies and improvement of employee-wellbeing can also contribute to improved productivity.

With the increased use of digital technology, comes more transparency: it is easier for employees to hold businesses accountable and at the same time promote their skills and find new jobs. As a result, businesses should be open and honest about how they reward, manage and develop their people. The research shows, however, that 53% of employees believe they are not paid fairly for the work they do and 49% say they do not have a good idea of the possible career paths available to them.

The last challenge is business agility, which, according to Hay Group, is hampered by slow decision making: 59% of respondents express their concern about the speed of decision making at their company. To help employees deal with the changing business world, continuous training and clear communication are critical, however, the research shows just over a third (37%) of employees say they get enough time for training, and 43% say their company does not communicate openly about change.

Martin Palimeris, Hay Group

The firm states that although these challenges are painting a “bleak picture for businesses going into 2015 and beyond”, many businesses are already viewing employee engagement as critical to future business success. “The successful organisations will be those that realise their employees are a unique asset and can help them meet the challenges both now, and as they intensify in the future,” concludes Palimeris.

* The six megatrends are: globalisation 2.0, environmental crisis, demographic change, individualism, digitisation and technological convergence.